Luminar: Lazr-focused on guidance
Nov-2021 (Q3 data)
The Story
In this valuation, I imagine a world where self-driving cars took off and Luminar managed to meet both of their revenues and EBITDA guidance before reducing their growths to be closer to the the mature Semiconductor industry. Mature Semiconductor industry was selected as the stable growth targets for operating margin and sales/capital due to being a closer target for the operating margins and similar value proposition (value proposition in both hardware and software). Auto Parts was chosen as the industry beta for the cost of capital calculation since that is the business Luminar is in.
The Assumptions
Base year Years 1-4 Years 5-10 After year 10 Link to story
Revenues 35.71%➡115.86% 80.10%➡3.49% 1.55% Grows according to the guidance but -10% in 2030 to account for the narrative change due to semiconductor crisis. Risk-free rate for the terminal year.
Operating margin (471.08%) (297.74%)➡36.65% 37.86%➡18.95% 18.00% Grows according to the guidance up to 2025, then falls back to 3rd quartile of mature Semiconductors firms in stable growth.
Tax rate 27.00% 27.00% 27.00% 27.00% Marginal tax rate according to 2021 KPMG data.
Reinvestment Sales/Capital = 1.03 ➡ 0.71 44.22% Median sales/capital of all Semiconductors firms to the median of mature Semiconductors firms.
Cost of Capital 2.57%➡2.88% 2.98%➡3.51% 3.61% Moving towards Auto Parts industry average
The Cash Flows
Revenues Operating Margin EBIT EBIT (1-t) Reinvestment FCFF Implied ROIC
Base year (2021) $22 (471.08%) ($103) ($103) (136.92%)
1 (2022) $30 (297.74%) ($89) ($89) $8 ($97) (107.06%)
2 (2023) $84 (109.44%) ($92) ($92) $54 ($146) (66.83%)
3 (2024) $331 4.98% $17 $17 $258 ($241) 4.18%
4 (2025) $715 36.65% $262 $262 $416 ($154) 32.31%
5 (2026) $1,288 37.86% $488 $434 $645 ($212) 29.77%
6 (2027) $2,090 34.07% $712 $520 $941 ($421) 21.68%
7 (2028) $3,103 30.29% $940 $686 $1,240 ($554) 18.86%
8 (2029) $3,936 26.51% $1,043 $762 $1,067 ($305) 16.19%
9 (2030) $4,430 22.73% $1,007 $735 $662 $72 13.69%
10 (2031) $4,584 18.95% $868 $634 $218 $416 11.35%
Terminal year $4,655 18.00% $838 $612 $270 $341 3.51%
The Value
Terminal cash flow $341
Terminal cost of capital 3.61%
Terminal value $16,567
PV (Terminal Value) $12,286
PV (CF over next 10 years) ($1,467)
Sum of PV $10,819
- Adjustment for distress $974 Probability of failure: 10.00%
- Debt & Minority Interests $12 Based on Ba1 rating from Moody's
+ Cash & Other Non-operating assets $546
Value of equity $10,379
- Value of equity options $380
Number of shares 361.55 million
Value per share $24.15 Stock was trading at $19.87
In millions USD except Value-per-share.